Tag: success

JULY 2016 – THE CONDITIONS FOR SUCCESS OF THE NEW PANAMA CANAL

The Panama canal

Introduction

On June 26, the Government of Panama announced, with great fanfare, the completion of the expansion of the Panama canal. It was a historic event for this small Central America country. The crowd was awaiting the traverse of the first container ship, a Cosco ship from Asia, measuring 300 meters long, 48.25 metres wide and capable of carrying 9 500 containers (TEUS): two times the maximum capacity of the old locks.

62 international delegations were invited to listen to the speech by President Juan Carlos Varela Rodríguez. The event reflected the project: the Panama canal plays a strategic role in international maritime transport. For the population of Panama, expectations are high, since this project will hopefully revive the country’s economy and restore the market share lost over time to the Suez canal.

Although the promotional campaign of the Panamanian Government is fully justified, studies on the impact of the project leave many elements imprecise and uncertain. The complexity of the world situation and the state of international trade which has evolved in recent years may explain it.

According to research conducted jointly by The Boston Consulting Group and C.H. Robinson, as much as 10 percent of container traffic between East Asia and the U.S. could shift from West Coast ports to East Coast ports by the year 2020. Other research also suggests that the expansion of the canal will impact the trade of bulk, especially between Asia and America.

However, several market conditions are necessary for the achievement of these forecasts. The following text presents an analysis of these conditions.

The role of Panama

A strategic location

The Panama canal plays a strategic and undeniable role in global transportation. It significantly reduces the distance required for the transport of goods. Transportation costs are substantially reduced, as are the price … Lire la suite